It seems only a short time ago that the UK had a plentiful supply of amateur and “accidental” landlords. These were people who essentially became involved in property investment because it seemed a safer and more flexible option than pension funds.
Over recent years, however, these property investors have largely departed the market as the government offered the carrot of pension’s freedoms while brandishing the stick of greater regulation in the property market (and tax changes).
As a result, the property market has become much more professional and the benefits of using an agent have become even greater.
From convenience to compliance
Up until relatively recently, the decision of whether or not to use an agent was largely driven by convenience. Most of the time, agents were hired largely on the basis of their marketing skills and their people-management skills.
They spared investors the hassle of finding tenants and dealing with tenant requests (reasonable or otherwise). They had connections with local tradespeople so it was easy for them to organize maintenance and ensure that repairs were dealt with promptly.
They were also skilled at managing payment issues and working out who could and would pay if given a bit of leeway to sort themselves out versus who needed firmer action. All these factors still hold true, but these days probably the main value of an agent is the fact that they keep landlords on the right side of the law.
From equality to security
There are two key points to remember about the law in general.
The first is that it is not necessarily just about what you did or did not do, it is about what you can show that you did or did not do.
Secondly, anybody can raise a lawsuit against you at any time, regardless of whether or not they have a reasonable complaint and this becomes even easier when they can do so for free by reporting you to a government regulator.
These points may sound harsh but they are true and modern property investors need to keep them in mind at all times.
Agents will check a property before it even goes on the market and make sure that it complies with all relevant laws and bylaws (both of which can and do change). They will also ensure that tenant selection is demonstrably compliant with the Equality Act.
The key word in that sentence is “demonstrably”, so that all involved have protection against an irate rejected customer using the Equalities Commission to vent their frustration.
They will also manage the Right to Rent checks so that they are carried out both to the satisfaction of the Home Office and to the satisfaction of the Equalities Commission.
They can manage inventories effectively which is crucial not only to protecting landlords against claims of unfair deductions from deposits, but also for demonstrating that the landlord had nothing to do with any damage caused by anything the tenant themselves brought into the home, such as faulty electrical appliances or furniture which is not properly fireproofed.
Mark Burns is the managing director of property investment company Hopwood House, who specialise in UK property investment, Buy-to-Let and Student Property Investment.